Mattel Inc. (NYSE: MAT) announced its second recall this month earlier today involving an estimated 18.6 million toys worldwide. The toys are being recalled because of magnet and lead paint hazard concerns. Roughly 18.2 million of the toys, including the Polly Pocket play sets, have powerful magnets that could cause fatal intestinal blockage if swallowed by a child. The company is also recalling 436,000 die-cast vehicles featuring the character Sarge from the movie "Cars" because of concerns there is excessive lead paint on the toys. 
Chief Executive Bob Roberts warned that there may indeed be even more additional problems found as Mattel increases product testing. Just last November Mattel had to recall 9.5 million magnetic toys in the United States as well. Mattel's chief rival Hasbro Inc. (NYSE: HAS) also had to recall about 1 million Easybake ovens in February after reports that children could get their fingers caught in the toys.
The entire toy industry has had a large amount of recalls over the past year. Parents are certainly become more concerned about the safety of their child's toys after so many recall alerts. The toy industry as a whole must have further product testing before releasing their toys in the future so that parents can feel more safe about their children's toys.
The stocks of MAT and HAS are likely to continue to stay under pressure until this uncertainty is lifted. These companies have received some major negative press in the past few quarters, and that never helps the corporate profit picture.
» Mattel Recalls Toys -- What's the Lesson For Small Business Owners? from WorkFromHomeMomma
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Tracked on: August 14, 2007 6:41 PM | Permalink to Trackback